Renewable Energy Certificates

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Renewable Energy Certificates (RECs) are environmental commodities that represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable energy resource. These certificates can be sold and traded via an open public market.

The owner of RECs can claim to have purchased renewable energy. While traditional carbon emissions trading programs promote low-carbon technologies by increasing the cost of emitting carbon, RECs can provide incentives for carbon-neutral renewable energy by providing a production subsidy to electricity generated from renewable sources.

In states which have a REC program, a green energy provider (such as a wind farm) is credited with one REC for every 1,000 kWh or 1 MWh of electricity it produces (for reference, an average residential customer consumes about 800 kWh in a month). A certifying agency gives each REC a unique identification number to make sure it doesn't get double-counted. The green energy is then fed into the electrical grid (by mandate), and the accompanying REC can then be sold on the open market.

Renewable Energy Certificates (RECs):

are an electronic form of currency initiated by the Renewable Energy (Electricity) Act 2000;

may be created, on the internet based registry system (known as the REC Registry), by eligible parties for each megawatt-hour of eligible renewable electricity generated or deemed to have generated;

are created by registered persons;

are validated by the Office of the Renewable Energy Regulator;

are registered;

are traded between registered persons;

are eventually surrendered to demonstrate liability compliance against the requirements of the Australian Government's mandatory renewable energy target or voluntary surrender. More information on Voluntary Surrender; and

may be traded separately from the physical electricity in a REC market.

Each REC:

must have its own unique code;

must be registered by the Renewable Energy Regulator before they are considered valid; and

remains valid until surrendered against a liability or until voluntary surrendered. For more information on Voluntary Surrender.

Each unique REC code is to contain, in order:

the registration number of the person who created the REC;

the accreditation code of the:

power station that generated the electricity; or

solar water heater installation; or

small generation unit installation;

the year in which the electricity generation or installation took place; and

a number, in an unbroken annual sequence starting at one, which represents the eligible megawatt hour of electricity generated or displaced.[1]